Things in the Sky

In a letter sent to Continental employees earlier this week, CEO Jeff Smisek (who took over on January 1), said, “I am going to refuse to accept any salary or annual bonus until we make a full-year profit. I am willing to make this commitment because I have faith in you, and because the tone for any business is set at the top.” Smisek’s annual salary is $730,000. It should be noted that analysts are expecting a full-year profit from the Houston-based airline.

Of course, that $730,000 is only base pay – Smisek is still eligible for other forms of compensation. For example, as President and COO, Smisek’s annual salary was $576,000, but he made nearly $4.9 million in 2008, almost $6.4 million in 2007, and over $5.8 million in 2006, according to Continental’s most recent annual proxy statement. But Smisek has made adjustments in this area in the past – from the same proxy statement:

Messrs. Kellner and Smisek each voluntarily waived his salary for the period June 1, 2008 through December 31, 2008, representing a waiver of $415,625 and $336,000 in compensation, respectively, and voluntarily withdrew from the annual incentive program for 2008.

Still a lot of money, but it is a reduction.

This move is great from a public relations perspective. While rhetoric about executive compensation has died down from a year ago, it’s still a polarizing issue. It also makes Smisek look better when compared to some of

Photo credit: Chris Weyer.

But the biggest hope is, of course, that this move sends a positive message to employees, saying that Smisek is committed to the company and willing to sacrifice like everyone else. And to be honest, I think that message will get across to many employees.

Of course, not all of the employees are happy, and this probably won’t change a thing in some cases. For example, take a look at this snippet from a recent “The Magenta Line,” a newsletter for Newark-based pilots:

…Mr. Smisek has been flitting around the system on his Lowering Expectations Tour, clogging access to our cockpits everywhere as he solemnly explains why he deserves his but we don’t deserve ours and there will be nothing but hard candy stuck to the bottom of our Christmas stockings this year because management didn’t want to pay for candy wrappers.

But Mr. Smisek can’t make everyone happy. His decision is a great move and should be applauded. Another Magenta Line excerpt can be found after the jump.

We got a report recently from one of our pilots about his trip from somewhere to IAH with Mr. Smisek on board. Of course he was fawned over by the flight attendants the whole way—Mr. Smisek was, not our pilot—but that probably goes without saying.

Well sir, they get to IAH and there are SIX rampers awaiting them: three to guide and wing-walk and three to watch the other three guide and wing-walk. No waiting for the gate to open, no waiting for the jetway to be positioned, no shortage of redcoats, agents, supervisors, sisters, cousins, and aunts to greet the Monarch of the Skies.

So our pilot gets off the airplane, heads up the jetway and—lo and behold—there’s Mr. Smisek still in the gate area, basking in the glow of the suck-up light. Our pilot approaches and engages Mr. Smisek—who seems to think that his arrival was the norm: no delays and an abundance of rampers, agents, and supervisors to greet the weary traveler. Our pilot tries to explain to Mr. Smisek that it’s perhaps his status that mustered the forces required to complete an obsequious on-time arrival—and is given a look such as only Mr. Smisek can deliver: contempt, disbelief, arrogance, and dismissal—all rolled into one.

It’s true: there is greatness among us—and his name is Jeff Smisek.